Web pioneer Yahoo Inc. (YHOO) has signed another multi-year digital radio deal with Clear Channel expanding on its strategy of striking content-sharing deals with traditional media brands. The financial terms of the deal were not disclosed.
Clear Channel is the biggest player in U.S. terrestrial radio, with a reach of more than 237 million monthly users in 150 markets. Clear Channel’s iHeartRadio boasts of a monthly audience of about 45 million and offers live digital feeds to more than 1,000 radio stations.
Per the deal, Yahoo will use Clear Channel's iHeartRadio platform as its official digital radio service. Both Yahoo and Clear Channel content will be cross-promoted on iHeartRadio.com, local radio station websites, Yahoo! media network, and other Yahoo properties, including its entertainment sites such as Yahoo movies, music and omg!.
The deal will also include partnering on live events. Yahoo will carry nearly a dozen live Clear Channel events annually as well as live video from this year's iHeartRadio Music Festival in Las Vegas.
The partnership is expected to benefit both companies over the long term through deeper user engagement. Clear Channel will be able to expand its user base through a digital media giant that serves 167 million unique users a month, according to comScore.
Good content is vital for a company serving ads, because the number of users it attracts to its properties is directly proportional to the ad revenue it generates. We believe that Yahoo! will continue to pursue this kind of content sharing deal in order to boost its online user base going forward.
Earlier this week, Yahoo’s agreement with European music streaming service Spotify was made for the same purpose. Already, the company has a number of content sharing deals with other companies including CNBC, and Walt Disney’s (DIS) ABC Television Group.
These continued partnerships could be part of Yahoo's drive to focus on areas other than its search business. As the company has virtually bowed out of the search market, we believe that it is looking to protect its share in the display and video ad market.
Yahoo has lost almost 65% of its value since its 2006 peak and has been struggling to improve its financials and build shareholder confidence. But the company has failed to turn around and is facing management turmoil following the recent dismissal of its third CEO in just three years.
However, the company’s first quarter non-GAAP earnings beat the Zacks Consensus Estimate by 8 cents. The 22.3% sequential increase and 5.1% year-over-year decline were better than what most investors were expecting.
The company is fighting the likes of Google Inc. (GOOG), Microsoft Corp. (MSFT) and Facebook Inc. (FB). However, despite its struggles in the recent past, partnerships of this sort are likely to boost investor sentiment.
Currently, Yahoo has a Zacks #3 Rank, implying a short-term Hold recommendation.
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